Texas Supreme Court Hears Argument on Whether to Adopt Exception to Eight-Corner Rule

At oral argument in the case of State Farm Lloyds v. Janet Richards,[1] the Texas Supreme Court heard from both sides on whether or not Texas courts should recognize a policy-language based exception to the eight-corners rule, applied when evaluating whether an insurer can introduce extrinsic evidence to contest its duty to defend the insured for a third-party liability claim. The so-called eight-corners rule allows a court to refer only to the relevant policy terms and factual allegations in the
Continue reading...

NY Appellate Court Confirms an Absence of Negligence is no Roadblock to AI Coverage

New York’s Appellate Division, First Department, handed insurers a lump of coal this holiday season, unanimously holding that a contractor’s insurance company (Insurer) owed a property owner and manager (Building Defendants) primary coverage as additional insureds, even though its named insured had nothing to do with the allegedly negligent acts giving rise to the subject injury, and despite the named insured previously prevailing against the Building Defendants’ claims for common law and contractual indemnification. As the First Department panel concluded,
Continue reading...

Failure to Issue a Reservation of Rights, and to Address an Insured’s Affirmative Defenses in a Coverage Dispute, May Preclude Denial of an Otherwise Excluded Claim

A recent Florida state court opinion emphasizes the importance of an insurer’s obligations in the event of a liability claim against an insured and a subsequent coverage dispute with that insured. In Hurchalla v. Homeowners Choice Property & Casualty Insurance Company, the insured was sued for tortious interference with business contracts. Although her liability policy did not insure against intentional acts, the insurer initially provided the insured with a defense. However, the insurer neglected to inform the insured that the
Continue reading...

Depositing Policy Limits Does Not End the Duty to Defend

An Oregon federal court revisited a common coverage question that comes up from time to time: When indemnity for a loss is reasonably clear, can an insurer limit its defense expense exposure by simply depositing the policy limits with the court? The answer, according to this court, and most other courts around the country, is no.[1] The liability policy in U.S. Fire Ins. V. Mother Earth School contained the commonly-found insuring agreement language which provides, in relevant part, that an
Continue reading...

Insurers Be Ready: New Jersey’s Two-Year Window Reviving Time-Barred Sex Abuse Suits is Open

On December 1, 2019, the two-year look-back period created by New Jersey Senate Measure S477 went into effect, reviving claims of sexual abuse that would otherwise be barred under the statute of limitations. In March 2019, S477 passed in the New Jersey State Senate by a vote of 32 to 1, followed by passage in the New Jersey State Assembly by a vote of 71-0, with five abstentions. The bill was signed into law by New Jersey Gov. Phil Murphy
Continue reading...

Venue Matters: Evaluating the Applicable Standard for Bad Faith Claims in New York

The insurance market has a strong interest in minimizing extra-contractual claims against it. These issues are often decided summarily at the pre-answer motion to dismiss stage or after discovery on summary judgment. Notably, however, since 2018, New York courts have articulated varying standards in evaluating a policyholder’s claim for breach of the implied covenant of good faith seeking consequential damages against its insurer in the context of these motions. Insurers have traditionally defended themselves against these extra-contractual claims by advancing
Continue reading...

Part 4: Privacy Policy Requirements Under the CCPA

This is our fourth blog post in a multi-part series addressing what insurers need to know about the California Consumer Privacy Act (CCPA). This post focuses on a business’ obligations when it comes to their privacy policy, such as including and disclosing certain information regarding consumers’ rights. While this post does not require any background on the CCPA, if you would like the benefit of our preliminary discussions before diving into this post we invite you to start with Part
Continue reading...

Florida Court Requires Plaintiff to Plead More Facts About a Cause of Loss

The U.S. District Court for the Middle District of Florida dismissed a property insurance case after holding that ambiguous, non-specific pleading of a cause of loss is not enough. Causation is often a focus in property insurance cases. The exact cause of a particular loss will determine if the loss is covered or excluded under the insurance policy—meaning whether a plaintiff-insured will recover from their insurer. However, in state and federal courts, plaintiffs often get by with pleading merely that
Continue reading...

Illinois: Latest State to Declare Malicious Prosecution Claims Only Trigger Coverage in Effect During Arrest

In this era of sophisticated DNA testing, exonerations of incarcerated individuals have become increasingly commonplace. The ensuing malicious prosecution lawsuits have justifiably resulted in high verdicts and settlements. The key issue for many municipalities is whether coverage is triggered for these malicious prosecution claims, and under which policies of insurance. On November 21, 2019, the Supreme Court of Illinois, in Sanders v. Illinois Union Insurance Company, 2019 IL 124565, definitively determined that claims of malicious prosecution trigger coverage only under
Continue reading...

Florida Bridge Collapse Resolution Offers Workaround for Multiple Claimant Scenarios

A recent bankruptcy plan filed by Munilla Construction Management (MCM)–the general contractor for the failed pedestrian bridge at Florida International University (FIU)–paves the way for judicially recognized interpleader-type scenarios allowing insurers to resolve multiple-claimant incidents where there may be insufficient policy limits. On November 15, 2018, the Southern District of Florida Bankruptcy Court agreed to expedite a process that would allow victims of the pedestrian bridge collapse to start receiving compensation payouts following the creation of a victim’s fund. By
Continue reading...